NEW YORK, May 15 (Xinhua) -- U.S. stocks tanked on Friday, retreating from recent record highs as surging oil prices and climbing Treasury yields led investors to price in the possibility of a Federal Reserve interest rate hike later this year.

A trader works on the floor of the New York Stock Exchange in New York, the United States, April 27, 2026. (File photo: Xinhua)

The Dow Jones Industrial Average dropped 1.07 percent to close at 49,526.17. The S&P 500 sank 1.24 percent to 7,408.5, and the tech-heavy Nasdaq Composite Index shed 1.54 percent to finish at 26,225.15.

Market performance was broadly negative, as 10 of the 11 primary S&P 500 sectors ended the session in the red. Materials and utilities led the decline, dropping 2.74 percent and 2.4 percent, respectively. Conversely, the energy sector bucked the trend, advancing 2.32 percent on the back of rising oil prices.

West Texas Intermediate crude for June delivery added 4.25 U.S. dollars, or 4.2 percent, to settle at 105.42 dollars a barrel on the New York Mercantile Exchange. Similarly, Brent crude for July delivery increased by 3.54 dollars, or 3.35 percent, to settle at 109.26 dollars a barrel on the London ICE Futures Exchange.

The sustained increase in energy costs, driven by ongoing geopolitical frictions in the Middle East, continues to underpin broader consumer price pressures. For the first time in the current macroeconomic cycle, financial market participants began pricing in the probability of further monetary tightening rather than easing.

The yield on the 30-year U.S. Treasury bond topped 5.1 percent, reaching its highest level since last year. According to the CME Group's FedWatch tool, fed funds futures now reflect a nearly 51 percent probability of a Fed interest rate increase as early as December, with the likelihood of a hike rising to 60 percent by January and exceeding 71 percent by March.

Meanwhile, the technology sector experienced widespread profit-taking following its recent upward momentum. Intel, Advanced Micro Devices, and Micron Technology all retreated more than 5 percent. Nvidia lost 4.42 percent, and recent market entrant Cerebras Systems shed 10.08 percent after its explosive public debut in the previous session.

Microsoft proved to be a notable exception to the technology sell-off, with its shares climbing 3.05 percent. The advance followed an announcement by billionaire investor Bill Ackman that his hedge fund Pershing Square Capital Management has built a significant new position in the software giant.

Investors will be focusing on the consumer sector next week. A heavy slate of corporate financial updates from major brick-and-mortar retailers is scheduled for release, including Walmart, Target, Home Depot, and TJX Companies.